Speed, however, doesn't yet mean correct numbers. The VAT return, the annual report and management decisions all rely on the same data the system produces automatically. If the setup is wrong, everything built on top of it is wrong too. That's why in automated accounting the chief accountant's role becomes bigger, not smaller.

Automation repeats mistakes; a person makes them once

If an accountant manually enters an invoice to the wrong account, that's one mistake. If the same mistake is written into an automatic rule, it repeats with every similar invoice, month after month. The entries look correct, the totals add up and nobody notices anything until the VAT return, the income statement or the auditor shows that something is wrong.

So automation doesn't remove the need for checks. What changes is what gets checked: instead of each individual entry, you need to review the rules, integrations and data flows that produce the entries.

Principles come before software

An automatic rule is simply the technical implementation of an accounting policy. If the policies haven't been agreed, you're automating randomness. Before you start setting things up, it should be clear:

• what the company's chart of accounts is, and which cost centres, projects or units need to be tracked separately;
• who approves invoices and under what conditions;
• how prepayments, income and expenses spanning several periods, and asset purchases are treated;
• which checks are done at the end of the month before reports are issued.

These decisions are made by the chief accountant together with the company's management. Only then does it make sense to set up the software.

Example: a correct entry, the wrong picture

A company sells a client an annual maintenance contract and issues the invoice in January. An automatic rule posts the whole amount as January sales revenue. Technically there's nothing wrong with the entry: the invoice exists and the amount is correct.

Economically, however, the picture is distorted. January looks very profitable and the other eleven months loss-making, even though the service is provided evenly throughout the year. If management makes decisions on this basis – for example, hiring someone new on the strength of January's result – it can prove expensive. A chief accountant recognises this kind of situation and sets up revenue accrual so that monthly results are comparable.

Several systems, one truth

A growing company rarely uses just one programme. An e-shop or POS system, inventory software, payroll software, document workflow and accounting all run side by side. Each system can be in order on its own, but discrepancies arise precisely at the integration points: a sale is in the e-shop but not in the accounts, stock levels don't match the balance sheet, returns go unrecorded.

The chief accountant's job is to look at the whole: compare the systems with each other, find out why the numbers don't match, and fix the problems at source, not just in the accounts.

The accountant sets things up, the chief accountant fine-tunes them

An experienced accountant can set up the bank integration, e-invoice reception and rules for recurring expenses well. The chief accountant's work begins where the question is no longer “how is the entry created?” but “do these numbers describe the company correctly?”:

• reporting that answers management's real questions;
• profitability views by product, project or unit;
• cash flow forecasting and comparing plans with reality;
• regular review and fine-tuning of the automatic rules.

At KL Raamatupidamine, accountants, chief accountants, financial controllers and CFOs work in one team. Automation and AI are our everyday tools, but responsibility for the numbers stays with people.

What this means for entrepreneurs

Incorrectly configured automation doesn't announce itself. The consequences come later: an incorrect VAT return and the tax risks that come with it, an annual report that doesn't give a true picture of the company, or management decisions based on distorted numbers.

The volume of automatically processed documents is growing fast, because since 1 July 2025 a business has the right to demand an e-invoice from another business. The more data flows without human hands, the more important it is that the foundations are right.

Summary

Software does exactly what it has been taught. The value of a chief accountant lies in making sure the teaching is right and that someone regularly checks whether the result actually reflects the company. Automated accounting is fast. Good automated accounting is fast and reliable.

If your accounting is already automated but you're not sure whether you can trust the numbers, let's review it together. Read also how accounting clean-up helps, and what monthly financial controlling.

The post Automated accounting: why software alone is not enough first appeared on KL Raamatupidamine.

Revenue is growing, new clients are coming in, the team is getting bigger – all the signs show the company is doing well. And yet the owner feels less confident about finances than ever before: money runs short in the bank account exactly when revenue is at its highest, and decisions – whether to hire someone, take out a loan or invest in equipment – are still made on gut feeling, because nobody can say what the numbers actually show.

This isn't the accountant's fault. The accountant is doing their job well: tax returns are filed on time, the balance sheet is correct, the entries are right. The problem is that in the growth phase, a company needs not only correct data but also someone who interprets that data with an eye on the future and helps make decisions. That's the CFO's role, and it differs from the accountant's role much more than most entrepreneurs think.

CFO vs accountant: each plays a different role

The simplest way to think about it is driving a car. The accountant is the rear-view mirror – showing accurately and reliably where you've come from. The CFO is the GPS and route planner in one: their question isn't “what happened?”, but “what happens next if we carry on like this?” and “what should we do to get where we want to go?”.

In short: the accountant makes the company's financial data correct; the CFO makes that data useful.

Why does growth suddenly make financial management so much more complex?

In a small company that has just started out, the financial picture is usually simple: few clients, few suppliers, one or two cash flow patterns that the owner keeps in their head. As the company grows, everything gets more complex at once: there are more clients and suppliers, payment terms differ, stock or labour costs have to be financed in advance, and new employees and new markets bring costs before they start bringing in revenue.

This is where the most common and most dangerous misconception of growing companies comes from: profit in the income statement doesn't mean cash in the bank. A company can be profitable on paper and at the same time on the verge of insolvency, if invoices are paid late, costs grow faster than collections, or capital is tied up in stock and unfinished projects. Accounting shows this after the fact – financial management should anticipate and prevent it.

EXAMPLE: A manufacturing company grew its revenue by almost a third in a year. New large orders required buying materials and hiring extra staff long before the clients paid their invoices. The income statement showed a nice profit, but at times there was so little money in the bank account that an overdraft had to be used repeatedly to pay salaries. The accounting was completely in order; what was missing was a cash flow forecast that would have shown the need to finance growth before the first large order.

Which signs show that you need a CFO?

A few clear signals worth paying attention to:

• Decisions (hiring, pricing, investments) are made on gut feeling rather than on numbers.
• Revenue is growing, but cash flow is unexpectedly tight or unpredictable.
• There's no clear overview of which product, service or client is actually the most profitable.
• Budget and reality repeatedly diverge, without anyone being able to say exactly why.
• A bank, investor or larger client asks for financial forecasts or analysis that nobody in the company currently knows how to prepare.
• Management meetings talk more about revenue than about margin, cash flow and the cost of growth.

EXAMPLE: In a fast-growing service company, the client base grew significantly in a year, but management had no overview of which client segment was actually profitable. Larger clients demanded more additional services and received bigger discounts, which ate away much of their real margin. Only after the first margin analysis did it become clear that a third of revenue brought the company just a tenth of its total profit – something that simply couldn't have been seen without the numbers.

The accountant and the CFO aren't competitors – they're partners

It's important to stress this: a growing company doesn't have to choose between an accountant and a CFO. The two roles complement each other. Good accounting is the foundation of any reliable financial management — without correct and timely data, a CFO can't forecast or analyse anything. The CFO, in turn, gives that data a direction and meaning that correct accounting alone doesn't provide.

In practice, this means that most growing companies don't need one role or the other, but both – often a team working together, where accounting and financial management speak the same language and use the same data.

When is the right time to consider an outsourced CFO service?

The good news is that you don't have to hire an expensive full-time CFO straight away to introduce financial management. Many growing companies start with a part-time or outsourced CFO service, which gives access to a strategic financial view without the fixed cost of a full-time employee. It's important to start before problems appear – not after the bank has already rejected a loan application or cash flow has already become critical.

If any of the signs described above sound familiar, it's probably time to think about how to add a strategic financial view to your accounting – without throwing overboard the accounting that has worked well so far.

Summary

Growth brings complexity that correct accounting alone no longer covers. The accountant gives you a reliable look back; the CFO helps you look ahead and make decisions that support growth rather than endanger it. These two roles together – not one at the expense of the other – are what separates companies that grow in a controlled way from those that grow into chaos.

In the next article we'll take a closer look at seven signs that a company is being run purely on gut feeling, and give advice on what to do about it. If you'd like to discuss now where your company stands on its financial management journey, get in touch with us.

Frequently asked questions

1. What is the biggest difference between a CFO and an accountant?
An accountant deals with past data (invoices, entries, tax returns, balance sheet), while a CFO looks ahead (budgets, financial forecasts, investment analysis and strategic planning).

2. Does a small company need an accountant or a CFO?
A start-up or small company primarily needs correct accounting to meet its legal obligations. The need for a CFO arises when the company starts growing fast and managing cash flow becomes complex.

3. Does a CFO have to be hired full-time?
No. For many growing companies, an outsourced or part-time CFO service is ideal, providing a professional strategic view without the fixed costs of a full-time employee.

Read on: Part-time CFO · Business controlling · Financial controlling · Pricing

The post CFO vs accountant first appeared on KL Raamatupidamine.

How do you choose a CFO? When choosing the right CFO, assess the candidate's ability to turn numbers into management decisions, their previous practical experience with similar business processes, and their courage to ask critical questions. What matters is finding a strategic partner who understands your company's specific needs, whether that's raising investment or increasing profitability.

Many entrepreneurs reach a point where they realise that accounting alone is no longer enough. The numbers are there and the reports get submitted, but there's still no clarity about the company's real situation.

Is the company actually profitable? Is growth really sustainable? Is money being used correctly? Will the next decisions support the company's development or create extra pressure later? This is exactly where the question arises: is it time for the company to bring in professional financial management at a strategic level?

And if the answer is yes, the next important question is: how to choose a CFO, who is the right partner for your company?

Why is it important to know how to choose a CFO?

Because a CFO isn't simply someone who looks at numbers. A good CFO helps you as a manager make better decisions, see the bigger picture and run the company with more confidence. In line with Estonian accounting and financial reporting standards , it's important that the data is reliable and transparent.

The right CFO helps you understand:

• what your company's profitability actually depends on
• where the money really goes
• which costs are worth reviewing
• when is the right time to invest
• how to plan growth so that cash supports it rather than holding it back

Five steps to choosing a CFO for your company

1. See whether they understand your company's real needs

Not every company needs a CFO for the same reason. One company needs help with budgeting, another wants to raise additional funding. A third wants to understand why sales are growing but profit isn't. What matters is whether the partner understands what your company actually needs today. A good CFO doesn't offer everyone the same solution, but can see the bottlenecks in your business.

2. Assess whether they can turn numbers into decisions

This is one of the most important skills. A CFO doesn't create value by sending you a complicated file. Value is created when they can tell you what the numbers mean, what matters most for your company, and which decisions would be sensible to make next.

3. Check whether they have experience with real companies

Knowledge is important, but it's not enough on its own. A good CFO has seen real-life situations: cash flow pressure, the risks of rapid growth and profit disappearing into costs. It's precisely practical experience that helps spot the details you can't see just by looking at reports.

4. Ask how they work

You probably don't need someone who just sends a file once a month. You need a partner who helps you run the company more consciously. Before deciding, it's worth understanding how often they produce overviews, which indicators they track and how your communication will work.

5. See whether they dare to ask uncomfortable questions

A good CFO isn't just someone who nods along. They ask: why has this cost grown? Is this service actually profitable? Can the company really afford this investment? It's exactly these questions that help a manager see what might otherwise go unnoticed.

Don't choose a CFO on price alone

This is where mistakes are very often made. A cheaper service may seem sensible at first, but if it doesn't give you more clarity or stronger decisions, it can end up costing much more. A good CFO isn't a cost – they're an investment in clearer management.

With the right choice, you get the feeling that you have a better overview of the company's money and that decisions are easier to make. You're no longer running the company on gut feeling alone, but relying on facts and best practice in finance.

In summary

When choosing a CFO, don't look only at the CV or the price of the service. See whether this person understands your needs and helps you feel more clarity as a manager. The right partner doesn't make decisions for you – they help you make better decisions. It's an important step towards growing your company consciously and profitably.

Do you feel your company could use more financial clarity? Write to me and let's look together at what kind of support your company actually needs today.

Read on: Part-time CFO · Business controlling · Financial controlling · Pricing

The post How to choose a CFO first appeared on KL Raamatupidamine.

When does a company need a CFO? Usually when accounting alone is no longer enough and management decisions require a stronger financial perspective. The main reasons for bringing in a CFO are raising investment, the need for accurate cash flow forecasts and the wish to increase business profitability. Financial management helps turn numbers into a clear action plan, ensuring the company's sustainable growth and stability.

It's often thought that only a large company needs a CFO. In reality, the need doesn't depend only on the size of the company, but on its stage of development and the decisions that need to be made.

Accounting helps keep past data in order, submit reports and meet obligations. Financial management, however, helps you go a step further – understanding what the numbers actually mean, where the money is going and which decisions affect the company's results the most.

A CFO helps a manager answer very practical questions:

• Is the company's growth really profitable?
• How much additional funding is actually needed?
• Are costs under control?
• Do today's decisions support the company's long-term development?

When is the right time to bring in financial management?

A CFO is usually brought in when the company faces a bigger change, growth, an investment or the need to get better control over money. Professional financial management ensures that all business decisions are backed by data.

Financial management and raising investment for a start-up

One of the most common reasons for bringing in a CFO is raising funds. If a company wants to take out a loan, bring in an investor or apply for a grant, well-kept reports alone aren't enough. It needs clear financial forecasts, a well-thought-out funding requirement and an understandable plan.

An investor or bank wants to see how much money the company needs, what it will be used for, how it will help the company grow and when a return can be expected.

A practical example: We helped a start-up, that was preparing for negotiations with investors. The company had a working service and its first clients, but lacked a clear financial view of how large its funding requirement really was and which goals it would be used to achieve. We worked through the company's revenue model, fixed costs and forecast sales growth, and prepared financial forecasts and a cash flow view. As a result, the start-up went into fundraising much better prepared.

When budgets need to be set

A good budget isn't just a spreadsheet. It's a management tool that helps plan activities, set goals and track whether the company is moving in the desired direction. Financial management helps prepare a realistic budget based on real data, not assumptions. This gives a manager a firmer basis for decisions and helps avoid managing by “gut feeling”.

When costs are rising and profitability is falling

In smaller companies it often happens that there are sales, but at the end of the month there's still a feeling that no money is left. In that case, the costs need to be reviewed in detail to assess which of them support the company's goals and which don't.

A practical example: We helped a micro company whose owner felt under constant financial pressure. We mapped the company's fixed costs, variable costs and irregular expenses. The analysis revealed several costs that had remained out of habit but created no value. As a result, the company was able to reduce costs and set up a system for tracking them. The manager gained a clear overview of where the money goes.

When the manager lacks a clear financial overview

Sometimes decisions are made largely on feeling. Financial management helps establish which indicators to track regularly and how to make decisions systematically. This makes management calmer and more conscious.

When bigger decisions lie ahead

Hiring a new employee (including accurate payroll), launching a new service or investing in equipment all affect the company's financial position. A CFO helps assess whether the company can afford it and what the cash flow risks are.

Why is a CFO needed?

A CFO's value lies in seeing the whole picture and making decisions with certainty. A CFO is often brought in precisely when a company wants to grow smarter, not just faster.

In summary: A CFO isn't brought in only when a company has problems. Often they're brought in when the company wants to take its next step more consciously and on a stronger financial foundation.

Accounting shows what has already happened. Financial management helps decide what should happen next. If you want to get your company's finances in order, get in touch with KL Raamatupidamine.

Read on: Part-time CFO · Business controlling · Financial controlling · Pricing

The post When does a company need a CFO? first appeared on KL Raamatupidamine.

Last updated: 16 October 2026. Tax rates may change; before making a bigger decision, check the latest information from the Tax and Customs Board or ask us.

Why do entrepreneurs liquidate a company?

• Their focus has changed and the old company has been left “hanging” with no activity.
• The company's purpose has been fulfilled, for example in the case of a project company.
• The business is no longer profitable.
• They want to be rid of the administrative burden of reporting and obligations.

A company with no activity must still submit an annual report. If it isn't submitted, the registrar may compulsorily dissolve the company, which is an unpleasant process for the board member.

Liquidation steps

1. Resolution and liquidator. The shareholders decide to liquidate the company and appoint a liquidator. The resolution is entered in the Business Register.
2. Notice to creditors. The liquidator publishes a notice in the Official Announcements (Ametlikud Teadaanded). Creditors have 4 months to submit their claims.
3. Putting the accounts in order. An opening liquidation balance sheet is prepared, and tax obligations and claims are checked.
4. Paying debts and distributing assets. Once the deadline for claims has passed, the debts are paid and the remaining assets are distributed among the shareholders.
5. Final balance sheet and deletion. A final liquidation balance sheet and a distribution proposal are prepared, and an application for deletion is submitted to the Business Register.

Examples

Example 1. An entrepreneur set up a small OÜ to provide services, later sold the business and moved abroad. The company stood idle: it earned no income, but reports still had to be submitted. Liquidation freed them from all future obligations.

Example 2. The owner of a manufacturing company sold the business to a larger group and liquidated the old company to avoid later confusion and double costs. Without proper liquidation, the company could have been left with tax debt and reporting obligations for years to come.

How KL Raamatupidamine helps

• We draw up the liquidation resolution and help appoint the liquidator.
• We put the accounts in order and prepare the liquidation balance sheets.
• We publish the notice to creditors and communicate with the authorities.
• We prepare the asset distribution and the application for deletion.

Price

We'll give you an exact price once we've reviewed the company's situation. You'll find more information on our company liquidation page.

Frequently asked questions

Sources: Commercial Code (Riigi Teataja), RIK help information.

The post Company liquidation: steps, duration and cost first appeared on KL Raamatupidamine.

Last updated: 16 October 2026. Tax rates may change; before making a bigger decision, check the latest information from the Tax and Customs Board or ask us.

When does voluntary registration make sense?

• You're making large investments before sales start: equipment, computers, a production line or stock.
• Your clients are mainly VAT-registered businesses, for whom VAT doesn't increase the final price.
• Many of your expenses are purchases that include VAT.
• You sell abroad or at the 0% rate, but you have costs related to taxable activity in Estonia.

When isn't it beneficial?

• Your clients are mainly private individuals and you can't raise the final price.
• Your main cost is your own work and there's little input VAT.
• Monthly VAT returns (KMD) and VAT invoice requirements would create a disproportionate amount of work.

Example: how VAT affects the price

Suppose your service currently costs €100.

So think through your pricing strategy before registering.

What do you need to prove when registering?

When registering voluntarily, you need to prove to the Tax and Customs Board that you are running a business or starting one. Suitable evidence includes contracts, quotes, purchase invoices, a business plan or a website. A new OÜ can be registered for VAT already at the time of founding in the company registration portal.

Input VAT isn't an automatic refund

You can only deduct VAT on business-related purchases if the purchase is linked to taxable supplies and documented with a proper invoice. There are restrictions, for example, for passenger cars, entertainment expenses and employee catering.

Frequently asked questions

Sources: Tax and Customs Board, eesti.ee.

The post Should an OÜ register for VAT voluntarily? first appeared on KL Raamatupidamine.

Last updated: 16 October 2026. Tax rates may change; before making a bigger decision, check the latest information from the Tax and Customs Board or ask us.

Why choose an OÜ?

• Limited liability. As a rule, a shareholder isn't liable for the company's debts with their personal assets.
• Simple and fast founding in the e-Business Register's company registration portal.
• Profit is taxed only when it's paid out. No income tax is paid on profit retained in the company; when dividends are paid out, income tax is 22/78 of the net dividend.
• A trusted business form in the eyes of banks, partners and investors.

Share capital in 2026

Since 1 February 2023, the minimum share capital of an OÜ is €0.01. Since then, an OÜ can no longer be founded without paying in the share capital: the share capital must be paid in before submitting the application for entry in the Business Register.

A small share capital is allowed, but think about whether it suits your company. A bank, partner or financier may see very small share capital as a sign of weakness.

Think it through before founding

• Field of activity. Choose your main field of activity according to the Estonian Classification of Economic Activities (EMTAK).
• Business name. Check that the name is available with a name search in the e-Business Register.
• Shareholders and board members. Who owns the company and who runs it?
• Amount of share capital.
• Address and contact person, if the board is not located in Estonia.

How do you found an OÜ?

1. Log in to the company registration portal with your ID card, Mobile-ID or Smart-ID.
2. Choose the expedited procedure and the standard articles of association. The standard articles then replace a notarised memorandum of association.
3. Enter the shareholders, board members, share capital, field of activity and address.
4. Pay in the share capital and the state fee.
5. If you wish, register the company for VAT straight away as well.
6. Sign the application digitally. In the expedited procedure, the company is usually registered within one working day.

If there are several founders and you want custom articles of association or a non-monetary contribution, the memorandum of association generally has to be notarised.

What to do after registration?

• Open a company bank account if you don't have one yet.
• Choose an accountant or accounting software, because accounting must be kept from day one.
• Register employees in the employment register (TÖR) no later than the day they start work.
• If turnover exceeds €40,000 in a calendar year, register for VAT within three working days.
• If your field of activity requires it, apply for an activity licence.
• Submit the annual report within six months of the end of the financial year.

Frequently asked questions

Sources: e-Business Register, Commercial Code (Riigi Teataja), eesti.ee.

The post Founding an OÜ in 2026: why choose a private limited company and how it works first appeared on KL Raamatupidamine.

Last updated: 16 October 2026. Tax rates may change; before making a bigger decision, check the latest information from the Tax and Customs Board or ask us.

When does the obligation to register arise?

The obligation arises on the day when turnover counted towards the threshold exceeds €40,000 from the start of the calendar year. The count starts again on 1 January every year.

The following generally count towards the threshold:

• taxable turnover arising in Estonia
• zero-rated turnover arising in Estonia
• certain real estate, financial and insurance transactions, if they are not occasional

As a rule, the following don't count: sales of fixed assets, occasional real estate and financial transactions, transactions whose place of supply is not Estonia, and dividends.

Example: before 12 June, turnover counted towards the threshold is €38,000. On 12 June another €4,000 of Estonian turnover arises. The threshold is exceeded on 12 June, and the application must be submitted within three working days.

Limited VAT liability

Even if turnover stays below €40,000, registration may be required. If you buy goods from another EU country worth more than €10,000 in a calendar year, the company is registered as a person with limited VAT liability.

For foreign services (Google and Meta advertising, cloud software, web hosting, foreign consulting), the obligation of a person with limited VAT liability may arise already from the very first service. Estonian VAT then has to be calculated on these purchases, but as a rule it cannot be deducted.

What changes after registration?

If a return deadline falls on a weekend or public holiday, it moves to the next working day. The payroll tax return TSD is still submitted by the 10th of each month.

What to do before you reach €40,000?

• From €30,000, track turnover counted towards the threshold at least once a month.
• Check the impact of a larger transaction before issuing the invoice.
• Decide whether your prices to clients exclude or include VAT.
• Agree with your accountant on the registration date and the first returns.

Registering late doesn't make the tax go away. The Tax and Customs Board may register you retroactively and demand VAT on the turnover in between, plus interest. If you can no longer charge the client the extra VAT, you'll pay it out of your margin.

How do you deregister?

You can apply for deregistration if turnover counted towards the threshold hasn't exceeded €40,000 in the current or previous calendar year and isn't expected to exceed it in the next 12 months either. Before deregistering, review your stock, fixed assets and previously deducted input VAT.

Frequently asked questions

Sources: Tax and Customs Board, Value Added Tax Act (Riigi Teataja).

The post When should a company register for VAT? (2026) first appeared on KL Raamatupidamine.